Nuclear Power in Lithuania

Lithuania closed its last nuclear reactor, which had been generating 70% of its electricity, at the end of 2009, due to EU pressure.

Electricity was a major export until the closure of Lithuania's nuclear plant.

A new nuclear plant is planned to be built by GE Hitachi. It is to involve vendor equity as well as the other Baltic states. Plans were affirmed in a 2014 multi-party agreement.However, it will require cooperation from other Baltic states, Poland and/or EU.

A policy objective is to minimise energy dependence on Russia.

Lithuania has a population of about 3.5 million. In 2004, the last year of having two reactors online, the country produced 13.9 billion kWh out of a total 19.3 billion kWh. In 2007, electricity production was 14.0 billion kWh gross, 70% (9.8 billion kWh) from the only operating nuclear reactor, and 17% (2.4 billion kWh) from gas. Net exports were 1.4 billion kWh. Per capita electricity consumption in 2007 was about 3400 kWh.

To the end of 2014, almost 90% of the country's gas comes from Russia, at a significantly higher price than paid by other EU countries. Following closure of its second nuclear power reactor at the end of 2009, over 60% of Lithuania's electricity is imported. The country, along with its two Baltic neighbours is oriented to the West and keen to increase its independence from Russia, which accounts for 80% of its energy imports.

A new energy policy in 2012 was cast around the Visaginas nuclear plant (details below), a new LNG terminal, and rebuilding the power grid. Energy reliance on Russia is to drop from 80% in 2012 to 55% by 2016 and 35% in 2020. Gas imports from Russia halved when the new floating LNG terminal started commercial deliveries in January 2015, the first contract being with Norway’s Statoil, for about one-fifth of the country’s needs (0.54 billion m3/yr over five years). From the end of 2015 the new LNG terminal is expected to supply 4 billion cubic metres per year, almost 80% of the three Baltic states’ needs. Statoil provided 60% of Lithuania’s gas in 2016. However, Gazprom then reduced its prices and new contracts mean that from 2017 it may again supply the majority of Lithuania’s gas. Achema’s fertiliser plant uses 1.3 billion cubic metres of gas per year, and expects most of this to come from Gazprom.

Due to the high cost of imported gas, 300 MWe of gas-fired generating plant is due to be closed in 2014 and 600 MWe more in 2015. This leaves a 455 MWe CCGT unit and two reserve units of 300 MWe each from 2016, with expanded transmission capacity (see below).

Electricity consumption in the three Baltic countries is expected to reach 29-33 billion kWh/yr by 2020, and without a large new power plant only two thirds of this will be covered by remaining capacity. The Baltic countries have been connected to Scandinavia and Europe by a single power transmission interconnection since 2007, the Estonian–Finnish “Estlink-1” of 350 MWe, undersea. Integration into the EU energy market is a strategic priority for all three countries as well as one of the goals of the Baltic Energy Market Interconnection Plan (BEMIP), signed by eight states of the Baltic region and the European Commission. The main goal of the BEMIP is to create a unified market of the Baltic Sea region. The plan also embraces the establishment of power interconnections with Poland “LitPol Link” (1000 MWe), with Sweden “NordBalt” (700 MWe) and with Finland “Estlink-2” (650 MWe, under construction). The new Visaginas power plant constitutes an integral part of the BEMIP. Apart from about 60 km of Lithuania’s border with Poland, the three Baltic states are bordered by Russia and Belarus.

Electricity imports from the EU are forecast to double by 2016, as the NordBalt power connection with Sweden and the LitPol interconnector with Poland enter into operation. However, imports will fall after the Visaginas nuclear plant begins operation. Electricity imports from Russia were projected to cease completely by 2016.

Nuclear industry development

In the northeast of the countrya, Lithuania hosted the two largest Russian reactors of the RBMK type. These Ignalina reactors were originally 1500 MWe units (1380 MWe net), but were later de-rated to 1300 MWe (1185 MWe net)b. Construction started in 1978 and they came on line at the end of 1983 (unit 1) and in 1987 (unit 2)c, with a 30-year design life. Lithuania assumed ownership of them in 1991 after the collapse of the Soviet Union. They were light-water, graphite-moderated types, similar to those at Chernobyl in the Ukrained. Construction on a third reactor at Ignalina commenced in 1985 but was suspended after the 1986 Chernobyl accident, and the unit was later demolished.

Originally the Iganlina plant was designed to provide power not only for Lithuania but also for neighbouring Latvia, Belarus and the Russian exclave of Kaliningrad. In 1989, 42% of the power was exported, but this fell through the 1990s.

In 1994, Lithuania agreed to accept funds – eventually 34.8 million ECU ($36.8 million) from the Nuclear Safety Account administered by the European Bank for Reconstruction and Development (EBRD)e – to support a safety improvement program at Ignalina. The EBRD placed conditions on the grant, which evolved to include closing both units, at least by the time their pressure tubes needed replacing after some 15-20 years. Substantial upgrades were effected, with considerable help from other countries, notably Sweden.

Due to strong European Union (EU) concerns about the RBMK reactor, by the time Lithuania applied to join the EU it was required to close them both down. Hence unit 1 was closed in December 2004 and, despite strong public opposition to its enforced closure1, unit 2 was closed at the end of 2009, leaving Russia as the only country that has operating RBMK reactors. The EU agreed to contribute towards decommissioning costs and some compensation,with support continuing to 2020. See later section on decommissioning.

The Ignalina plant was operated by Ignalinos Atominé Elektriné (IAE) and supplied power to national utility Lietuvos Energija at very low cost. Electricity prices increased dramatically following the closure of the plant at the end of 2009.f

Shutdown power reactors in Lithuania

Reactor

Type

Net MWe

First power

Closed

Ignalina 1

RBMK

1185

12/1983

End of 2004

Ignalina 2

RBMK

1185

8/1987

End of 2009

Plans for new nuclear capacity – Visaginas

In February 2007, the three Baltic states (Lithuania, Latvia and Estonia) and Poland agreed to build a new nuclear plant at Ignalina, initially with 3200 MWe capacity (2 x 1600 MWe)g. Though located next to the Soviet-era Ignalina plant near the Belarus border, the new one was to be called Visaginas after the nearby town of that name. The Visaginas Nuclear Energy (Visagino Atominė Elektrinė, VAE) company was established in August 2008 for the new units.

In April 2009, the Ministry of Environment approved the final Environmental Impact Assessment (EIA) report but imposed a 3200 MW limit on heat to be discharged into Lake Drukshyai, effectively capping the capacity able to use that at about 1700 MWe. Above this, cooling towers would be necessary. The EIA report considered a plant of at least two units of total capacity up to 3400 MWe, using one of the 11 reactor designs under considerationh.

In 2009, the government commissioned an international advisory consortium, led by the Rothschild investment bank, to prepare a business model and financing plan for the Visaginas project. This was adopted by the government, which proceeded to invite expressions of interest by major strategic investors to supplement the role of regional partners in providing a plant up to 1400 MWe. This was put forward as an attractive investment proposition, with favourable environment, infrastructure in place, support from the EU Commission, and competition from Kaliningrad the only downside. The investor would get a majority stake (probably 51%) in the proposed new plant, alongside Lithuania's Lietuvos Energija, Latvia's Latvenergo, Estonia's Eesti Energia and (until December 2011) Poland's Polska Grupa Energetyczna (PGE)i. However, with Lithuania wanting 34% of the project and Poland then wanting 30% of it, Latvia and Estonia were unhappy with the prospect of minor stakes and the split was far from clear.

In April 2010, formal proposals from five selected strategic investors were submitted to the government, and bids from these were then sought. Early in December 2010, it was announced that the tender had failed after two bids were received. One undisclosed bid did not comply with tender requirements and the other, from Korea Electric Power Corporation (Kepco), was withdrawn two weeks after submittal13. The Lithuanian government said it would instead conduct direct negotiations with potential investors and that it expected to begin operation of the new plant in 2020. At an early December 2010 meeting in Warsaw, prime ministers of Lithuania, Latvia, Estonia and Poland confirmed their support for the Visaginas project.

In May 2011 "competitive proposals from potential strategic investors" were received, from Westinghouse and Hitachi GE. In July the government selected Hitachi as strategic investor, though it will be GE Hitachi which does the engineering, procurement and construction (EPC contract). Lithuania's partners in the project, Estonia, Latvia and Poland participated in the evaluation to determine which of the two proposals was "most economically advantageous." Their energy companies will be investors with Hitachi in the project company.

GE Hitachi plans to build a single 1350 MWe Advanced Boiling Water Reactor, several of which are operating and under construction in Japan and Taiwan, or a pair of these. The first was expected to operate from 2020. A combined construction and operating licence was to be issued by July 2015, and a final investment decision then made. The cost of the project was estimated at €4.92 billion.

In October 2011 the government formally notified the European Commission of plans for the new nuclear power plant at Visaginas to be built in collaboration with Estonia, Latvia and Poland. However, in December Poland withdrew from the project, saying that VAE's conditions were unacceptable to PGE, and it had other plans anyway. In March 2012 the prime ministers of Estonia and Latvia reiterated their support for the project, a concession agreement with Hitachi was initialed and then in May signed, providing the contractual framework for the project and giving Hitachi a 20% stake in it. In May 2012 the Lithuanian parliament approved the project and the concession agreement. Initially Latvia was to take 20% of the project company and Estonia 22% for about €1 billion each. Lithuania would retain 38%.

However, a non-binding referendum held in conjunction with a national election in October 2012 clouded the prospects for the Visaginas project. The referendum question asked if voters wanted new nuclear power capacity built, and 63% said no. The Social Democrats had forced the referendum in order to make Visaginas an election issue, and they formed a government with Labor and two smaller parties (they had led a minority government 2004-08). They considered the project too costly. Without Visaginas, both Lithuania and its two Baltic neighbours to the north would remain largely dependent on Russia for electricity. Also the economic prospects of the 2400 MWe Baltic plant then under construction in Kaliningrad, 200 km from Vilnius, would be greatly improved, though this has since been put on hold due to lack of customers.

In March 2014, following Russia’s annexation of Crimea, seven parliamentary parties* signed a broad agreement expressing consensus on the country’s security policy to 2020, including energy security. The agreement reaffirms Lithuania's desire to reinforce cooperation with strategic partners – the Baltic and Nordic countries, the EU and the USA, as a principal foreign policy goal. It identifies energy dependence as one of the greatest challenges to national security. Hence a priority “is to integrate as quickly as possible into the EU's internal energy market and to implement major energy projects, such as the LNG terminal, the Visaginas Nuclear Power Plant and power interconnections with Sweden and Poland.” The nuclear plant project has to be implemented “in accordance to the terms and conditions of financing and participation improved in cooperation with partners in order to expand the autonomous and competitive basic capacities of generating electricity.”

* The agreement was signed by Chairman of the Lithuanian Social Democratic Party, Chairperson of the Labor Party, Chairman of the Homeland Union – Christian Democrats (former PM to 2012), Vice Chairman of the Order and Justice Party, Chairman of the Lithuanian Liberal Movement, Chairman of the Electoral Action of Poles in Lithuania, and representative of the Way of Courage Party.

The government planned to discuss unresolved project issues with Hitachi, Latvia and Estonia during 2014 and develop an action plan to resolve them, including bringing forward grid synchronization among Baltic states and with the EU. In July 2014 an agreement with Hitachi regarding the project company was signed. In June 2015 Hitachi said that it expected the project company to be set up "in about a year", and the energy minister said that discussions were proceeding with Latvia and Estonia. Hitachi estimates the cost at about $4 billion, with it taking 20%, Lithuania 40%, and the balance from Latvia, Estonia and others. At the end of 2015 the project company was wound down and in November 2016 the government released a National Energy Strategy and said it was delaying the 3400 MWe project until it either becomes cost effective under market conditions or is needed for energy security.

Investment and offtake agreements with regional utilities were being negotiated as wholesale market liberalization proceeded, including adoption of Nordpool rules in 2013 and integration into Nordpool in 2015. However, EU rules stipulate a 15-year limit on contracts for electricity supply, which constrains financing. In May 2012 the government approved a bill to integrate the country’s electricity system into that of the EU (ENTSO-E – European Network of Transmission System Operators for Electricity) for synchronous operation from 2020. To this end, the first Lithuanian-Polish electricity link – LitPol Link 1 – should be put in operation by the end of 2015 and an additional LitPol Link 2 should be built in 2018-2020. The Lithuanian-Swedish NordBalt power link should be commissioned at the end of 2015.

Proposed power reactors in Lithuania

Reactor

Type

Gross MWe

Construction start

Operation

Visaginas 1

ABWR

1350

uncertain

??

Visaginas 2

ABWR

1350

uncertain

??

While discussions proceed regarding Visaginas, Russia started to build the 2400 MWe Baltic nuclear power plant in Kaliningrad. Russia's RAO UES (57% owned by Rosatom) has signed an agreement with its Lithuanian subsidiary RAO Lietuva to export 1000 MWe of power from this to Lithuania from 2017. However, Lithuania was contesting the location of the Baltic plant since it is only 10 km from the border and 200 km from Vilnius, and it said that the environmental assessment did not meet the requirements of the Espoo Convention* governing such. The former government was therefore not keen to buy electricity from it. Poland also discontinued talks with InterRao regarding buying power from the Baltic plant. Rosatom has said that it has responded to all Lithuania’s questions and sent more than 1000 pages of information to it. Rosatom subsequently, in June 2013, suspended construction of the Baltic plant due to lack of interest by the Baltic states, Poland and Germany in buying power from the project.

* Convention on Environmental Impact Assessment in a Transboundary Context. Belarus has ratified the convention, Russia is a signatory only.

Lithuania is also objecting on the same basis to Belarus plans to build a new nuclear power plant at Ostrovets, 23 km from the border and 55 km from Vilnius. Belarus claims to have answered all the questions put to it regarding siting the plant. Lithuania filed a complaint with the Implementation Committee of the Espoo Convention, and in 2013 the committee ruled that Belarus had violated the convention. In 2014, a meeting of the parties to the convention "encouraged” Belarus to take measures to build confidence with neighboring countries concerning the project. They also suggested that Belarus invite the IAEA to carry out a site and external events design (SEED) mission at Ostravets. Belarus did so, and in January 2017 the IAEA team reported favourably for Belarus.

Baltic Energy Market Interconnector Plan

Visaginas is envisaged as the cornerstone of the new Baltic Energy Market Interconnector Plan (BEMIP) linking to Poland, Finland and Sweden, with Lithuania the hub. A high-voltage (400 kV) 1000 MW DC southwest interconnection – PowerBridge or LitPol Link – costing €250-300 million, to improve transmission capacity between Lithuania and Poland is being built, with 500 MW by January 2016 and another 500 MW by 2020j. Much of the funding is from the European Union (EU). This follows inauguration of an interconnector between Estonia and Finland to the north – Estlink-1, a 150 kV, 350 MW DC cable costing €110 million and also supported by EU funding. Estlink-2 will provide a further 650 MW in 2014. Another major transmission link westward under the Baltic Sea, the 700 MWe NordBalt project, connects Klaipeda in Lithuania and Nybro in Sweden. The €550 million project is expected to be completed by the end of 201514. (The Baltic states and Belarus have good interconnection of grids from the Soviet era, but this did not extend to Poland, let alone to Germany. Kaliningrad gets much of its electricity from Russia, via Belarus and the Lithuanian grid.)

The revised energy policy in 2012 involves rebuilding the grid to be independent of the Russian/Belarus system and to work in with the European Network of Transmission System Operators (ENTSO) synchronous system, as well as strengthening interconnection among the three Baltic states.

However, in March 2013 Rosatom said that Russia had officially notified the European Commission (EC) that it wanted its Baltic exclave of Kaliningrad to join the ENTSO system. The EU authorized the EC to hold talks with Russia and Belarus on disconnection of the transmission systems of Lithuania, Latvia and Estonia from the IPS/UPS system controlled by Russia. Rosatom renewed the proposal for a transmission link between Kaliningrad and Poland, and asked the EC to build this into the Baltic Energy Market Interconnection Plan (BEMIT) to obtain EU financial support. It appears that there was no positive response, and Lithuania continues to take measures to isolate Kaliningrad.

Radioactive waste management

The Radioactive Waste Management Agency (RATA) was established in 2001 by the Ministry of Economy for management and final disposal of all radioactive waste from the Ignalina plant.

In 2007, RATA identified a site close to Ignalina for a near-surface final repository for low- and intermediate-level wastes and the government approved this. In August 2009, VATESI issued a licence to build the Solid Waste Management and Storage Facilities (SWMSF) at the Ignalina site for all solid operational and decommissioning wastes. In November 2009 a consortium led by Areva was contracted to design the €10 million repository, which will consist of reinforced concrete cells holding about 120,000 cubic metres of wastes immobilised in a cement matrix. It will occupy 40 ha close to the plant. After 2030 it will be closed, covered with multi-layer protective barriers, and finally monitored for 300 years. In June 2015 the Ignalina plant applied for a licence to operate the SWMSF to accept decommissioning wastes from 2021. It was opened for cold testing in August 2015, and VATESI expects to licence it in 2017.

The new SWMSF comprises two separate sites. The solid waste retrieval facility has been built next to the existing temporary waste storage buildings inside the perimeter of the Ignalina plant. The solid waste treatment and storage facilities have been constructed on a new site close to the plant, adjacent to the interim used fuel storage facility.

Due to the fuel pools at both reactors being essentially full, some used fuel is stored in dry casks on site. A new interim spent fuel storage facility (ISFSF) was built by a consortium led by GNS-Nukem about one kilometre from the power plant. A construction licence was issued in September 2009 and mechanical completion and pre-commissioning was completed in 2016. A test operating licence was issued by VATESI in September 2016, and commercial operation was licensed in May 2017. From October 2017 it will store most of the used fuel that has accumulated over the course of the plant's operation. Some 18,000 RBMK-1500 fuel assemblies from Ignalina 1&2 will be stored in a total of 202 metal and concrete Constor M2 containers at the facility for 50 years. Phase 1 contract was for €93 million, and in 2009 an amendment for phase 2 took the project to €193.5 million, financed by the EBRD’s International Decommissioning Support Fund.

In 2010 VATESI licenced construction of a very low-level waste (VLLW) facility to store 60,000 cubic metres of VLLW from both operation and decommissioning of the plant, from 2011. It is close to the new used fuel storage facility and the solid radioactive waste treatment and storage facility.

Reactor decommissioning

Both Ignalina RBMK reactors are now being decommissioned. The used nuclear fuel from unit 2 was evidently unloaded by April 2012. By April 2016, it is expected that all fuel from units 1&2 will have been moved from the used fuel storage pools into casks and transported to the new interim spent fuel storage facility, where it is to remain for 50 years. Dismantling of unit 2 commenced in mid-2014. Funding for this was suspended by EBRD in December 2012 due to lack of progress, but resumed in July 2013. For short-lived, low-level waste, a separate storage facility was to be operating by the end of 2010.

Shutdown power reactors in Liithuania

Type

Net MWe

First power

Closed

Ignalina 1

RBMK

1185

12/1983

end of 2004

Ignalina 2

RBMK

1185

8/1987

end of 2009

The total estimated cost of the Ignalina decommissioning project is over €2.5 billion, with the European Union (EU) having pledged €1.4 billion towards these costs. (Some €875 million had been received to the end of 2009, and a further €450 million approved at the end of 2013.) EU funding for this work is largely through the Ignalina International Decommissioning Support Fund (IIDSF) administered by the European Bank for Reconstruction & Development (EBRD) and two other funds administered by EBRD. About 95% of the required decommissioning funds are being provided by the EU member states, and the spending is being administered by a Central Project Management Agency (CPMA) and the EBRD. The other 5% comes from Lithuanian state funds through the state's own energy agency.

Public opinion

A late 2009 survey (N=1000) carried out for Lithuania's State Nuclear Power Safety Inspectorate (VATESI) found that 73% of the population felt that it was possible to operate nuclear power plants in a safe manner15. This is slightly up on the 69% recorded in the European Union's 2006 Eurobarometer special survey. More than half of those polled agreed that storage and transportation of radioactive waste could be done safely, with 56% agreeing on storage and 59% on transportation.

Regulation

In 1991, Lithuania's State Nuclear Power Safety Inspectorate (Valstybinė atominės energetikos saugos inspekcija, VATESI) was set up to oversee Ignalina. VATESI is the state regulatory and supervisory authority for nuclear energy and the safety of activities involving sources of ionising radiation. It is now an independent institution which reports directly to government.

A technical support organisation, the Independent Safety Analysis Group (ISAG) was also set up by the government at the Lithuanian Energy Institute in Kaunas to give technical assistance to both VATESI and the plant.

The Radiation Protection Centre oversees radiation protection, including monitoring of public exposure. It drafts laws and regulations on radiation protection.

Lithuania has been party to the Vienna Convention on civil liability for nuclear damage since 1994. It became a member of the International Atomic Energy Agency in 1993.

Non-proliferation

Lithuania came under the Nuclear Non-Proliferation Treaty (NPT) in 1992 and the Additional Protocol in came into force in 2000.

Further Information

Notes

a. The Ignalina site is located near the town of Visaginas, 130 km from Vilnius, near the point where Lithuania's borders with Latvia and Belarus meet. The plant is beside a large lake, Lake Drukshyai, which was used for cooling. [Back]

b. The design capacity of the two Ignalina RBMK-1500 reactors was 4800 MWt (1500 MWe) each. Following safety concerns arising from the April 1986 accident at Chernobyl, it was decided to limit operation of the units to 4200 MWt, effectively derating them. [Back]

c. Construction of unit 2 commenced in 1980 and was completed in 1986. However, its startup was delayed until August 1987 due to the April 1986 accident at Chernobyl. [Back]

d. The Chernobyl reactors were RBMK-1000 units, which differ considerably from the RBMK-1500 units at Ignalina. The Ignalina units were fitted with an extensive accident localisation system (ALS), which is a series of pressure suppression compartments that mitigates the effects of rapid steam production (for example due to a pipe break). Following the Chernobyl accident, several safety upgrades were made to existing RBMK reactors – these are described in the information paper on RBMK Reactors. These modifications ensured that a runaway power excursion as happened at Chernobyl could not have occurred at the Ignalina units. [Back]

e. The Nuclear Safety Account was the first multilateral fund set up at the European Bank for Reconstruction and Development (EBRD) in 1993 to finance nuclear safety projects in central and eastern Europe. See the page on nuclear safety on the EBRD website (www.ebrd.com). [Back]

f. In January 2010 – the month following the shutdown of Ignalina 2 – electricity prices increased by 33.3%. [Back]

g. In February 2006, the prime ministers of Lithuania, Latvia and Estonia signed a communiqué towards building a new nuclear plant in Lithuania. Soon after, the heads of the three Baltic national energy providing companies – Lietuvos Energija AB, Eesti Energia and Latvenergo – signed a memorandum of understanding (MoU) on 'Preparation for Construction of a New Nuclear Reactor in Lithuania' with the three parties participating and contributing to the project on equal terms2. A feasibility study launched by the MoU showed that a new nuclear plant costing €2.5-4.0 billion would be economically attractive and could be on line in 2015.

In July 2006, Lithuanian Prime Minister Gediminas Kirkilas invited Poland to join in the project, despite Lithuania's Baltic partners being against Poland's involvement. In December 2006, the Baltic states agreed to discuss cooperation with Poland and, in March 2007, it was announced that Poland was to participate. The envisaged capacity of the proposed plant was increased to up to 3200 MWe, up from the 800-1600 MWe capacity originally planned. Lithuania said it would have a 34% stake, with each of the other three parties taking 22%, but a formal agreement could not be reached.

In the first half of 2008, the Lithuanian Electricity Organization (LEO LT), a national energy holding company, was established by the Lithuanian government to raise funds for the new nuclear plant. The Lithuanian government held 61.7% of LEO LT and NDX Energija 38.3%. The government's 96.4% holding in Lietuvos Energija along with its 71.34% stake in RST (Rytų skirstomieji tinklai, Eastern Power Grid Company) were transferred to LEO LT; and NDX Energija transferred its 97.1% stake in VST (Vakarų skirstomieji tinklai, Western Power Grid Company) to LEO LT. Much controversy surrounded the formation of LEO LT and the general election at the end of 2008 brought in a new government (under Prime Minister Andrius Kubilius) that was against the company. At the end of 2009, parliament voted to dissolve LEO LT.

In the meantime, in July 2008, LEO LT decided to name the new plant after the nearby town of Visaginas, although it would be built adjacent to the Ignalina RBMKs. The Visaginas Nuclear Energy (Visagino Atominė Elektrinė, VAE) joint venture company was established in August 2008 for the new units. LEO LT initially owned all the shares in the new company and intended to retain 51%, leaving Poland, Latvia and Estonia 16.3% each.

Following the dissolution of LEO LT, at the end of 2009, the Lithuanian government officially began searching for strategic investors in the project (see Note i below).

There are many other factors affecting the project, not least of which is a shared desire of several countries in the region to not be too dependent on Russia for energy. A number of factors have heightened security of supply concerns in the region, including:

In January 2006, following a number of disputes over prices and debts relating to natural gas supplies to Ukraine, Russia cut off gas supplies to Ukraine. There have been further disputes over gas supplies between the two countries, including disruptions to gas supplies in 2009.

In January 2007, Russia cut off oil supplies through the Druzhba pipeline through Belarus following a dispute over oil duties being imposed by both sides. The pipeline supplies about 1.2 million barrels of oil per day to Germany, Ukraine, Hungary, the Czech Republic and Slovakia, as well as Poland, which relies on the pipeline for nearly all of its oil imports.

In 2006, Polish company PKN Orlen acquired a majority stake in the Mazeikiu Nafta oil refinery in Lithuania. The refinery, which was renamed Orlen Lietuva, is the largest refiner in Central and Eastern Europe and is the largest buyer of Russian oil in Europe. Soon after the sale, supplies via the Druzhba pipeline to the refinery were shut off, apparently due to a fault in the line, requiring crude oil to be supplied by tanker (involving higher transport costs). Russia has claimed to be in talks with PKN Orlen to buy the refinery.

The Nord Stream project (majority-owned by Russia's Gazprom) to build a natural gas offshore pipeline from Russia directly to Germany – bypassing the Baltic states and Poland – could put Russia in a position where it is able to limit supplies to some of its neighbours without affecting supplies to Western Europe. First deliveries are expected in 2011.

In addition, Russia is building a nuclear plant in the Neman district of the Kaliningrad exclave, close to the border with Lithuania. This project to build two VVER-1200 units is seen as a direct rival to the Ignalina replacement project3. A ceremony marking the start of construction of the Baltic Nuclear Power Plant was held in February 2010, and full construction began early in 2012. Russia expeced to complete unit 1 by 2016 and unit 2 by 2018, if not sooner4. Russia invited Lithuania to participate in the project but the invitation was declined5.

Belarus is also building a VVER-1200 nuclear plant, initially with two units6located in the Ostovets/Astravets district of the Hrodna region, near the Lithuanian border. Construction started in November 2013 and the first unit is expected on line in 2019.

Even Lithuania's partners in the Visaginas project have proposed building nuclear reactors in their own countries. Early in 2008, Estonia's Ministry of Economic Affairs and Communication announced that it would compile a shortlist of possible locations in Estonia for the country's first nuclear power plant8. And Poland's largest power group, Polska Grupa Energetyczna (PGE) is planning to build two nuclear power plants with a capacity of about 3000 MWe each, with the first unit being commissioned by 20209. The northeren Zarnowiec site near the Baltic Sea coast, where construction of a 4-unit VVER-440 plant was aborted at the end of the 1980s, is seen as the most suitable location10. [Back]

i. At the end of 2009, the Lithuanian government began searching for strategic investors to take a majority stake (probably 51%) in the construction and operation of a new nuclear power plant11. Lithuania intends to hold a 34% share, and the balance may be offered to regional partners from Latvia, Estonia and Poland, with whom VAE is also negotiating. The names of the possible investors were not revealed, but it is understood that interest was shown by 25 companies, including EDF, Suez-GDF, E.ON, RWE, Enel, Iberdrola and Vattenfall. The strategic investor is expected to buy a controlling share in the project implementation company. [Back]